Cryptocurrency has gained the interest of investors, but it has a challenging problem. It is hard to spend this digital currency than regular money.
New services, assisted by technology, helps to use digital coins for day-to-day finances.
Cryptocurrency Banking
Cryptocurrency banking is considered as a wrong term because exchange companies that offer such services aren’t banks. It manages the cryptocurrency balances of the customers. This kind of banking allows customers to hold their funds in a digital wallet or spend it like traditional money.
Benefits
Cryptocurrency debit cards are the main benefit of this kind of banking. It allows one to use in more mainstream ways for daily purchases and withdraw it as cash instead of investments.
Before the debit cards, one can spend the digital coins only to accept them directly or sell them on exchanges. Financial technology firms are partnering with banks or debit card issuers to offer this debit card.
The firms use the regulatory and logistical framework to automatically sell the cryptocurrencies after converting them into dollars and permitting retailers to accept them. It allows the acceptance of cryptocurrency debit cards wherever there is an approval of regular debit cards.
Barriers
Volatility in the crypto markets is the main barrier. One needs to accept that ‘if the coin falls, you lose a lot of money.
Banks rely on stable currency during lending, borrowing, or collecting interest. It is not possible in the case of cryptocurrency, which shifts their preference to traditional money.
The crypto transactions depend on the real-world value of the coin. The price keeps on fluctuating. Hence, one needs to take the risk that the coin’s value might rise after you spend it. Example: You bought a sandwich at $5, but later the coin’s value gets doubled, which means that the effective cost of the sandwich is $10.
But the value of the digital coin could also fall, making the purchases a good deal.
Another hindrance is that the regulators are still assessing the cryptocurrency fintech. The US Securities and Commission announced that it might sue the most well-known crypto exchange, Coinbase, for lending a novel lending product.
How to use Cryptocurrency Banking
To use this banking service, first purchase cryptocurrency, such as Bitcoin, Ethereum, etc. Several apps have made it easy to trade cryptos, even in small amounts, and keep them in a digital wallet.
If you want to spend the balance, open an account with any exchange that offers cryptocurrency debit cards and uses the digital currency that you have.
Coinbase provides debit cards that let customers spend the digital assets and earn crypto rewards on the same. BitPay offers a prepaid Mastercard debit card that allows customers to use their digital coins.
In future, cryptocurrencies have the potential to offer peer-to-peer loans, where customers can quickly process loans to each other. It is an untapped market with potential. The world of cryptocurrency banking is limited to a small number of players offering new products and services.
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